Huge rise in private investments in 2009 after miserly 2008

Published on Tuesday 5 January 2010 20:52

PRIVATE investors piled ten times more money into investment funds in the first 11 months of last year than in the corresponding period in 2008, figures out yesterday revealed.

Net sales of private investment funds – ie, money going in minus redemptions and switches – soared past the 2 billion mark for the eighth successive month in November as confidence flowed back to the markets, according to the Investment Management Association (IMA).

Fund inflows of 2.4bn in November took the 2009 total up to 23.6bn with one month's figures yet to come. In contrast, the year to November 2008 saw fund inflows of just 2.3bn as investors fled market volatility.

Sales of individual savings accounts (Isas) reached 2.6bn as of the end of November, the highest level since 2002. Sales were boosted by the October increase in the annual Isa allowance to 10,200 for over 50s.

Richard Saunders, chief executive of the IMA, said: "It is good to see investors once again taking advantage of the benefits of Isas after several years of net outflows. The last few months have seen a resurgence of sales of equity and property funds."

Equity funds outsold corporate bond funds for the third successive month in November as investors buoyed by a 20 per cent FTSE recovery rediscovered their appetite for risk. Equity inflows of 930 million compared with 187m inflows into bond funds, which had been the best selling sector for 14 consecutive months until September.

Property funds were the biggest seller in November, with investors increasingly convinced that commercial property prices are ready to rebound after a massive 78 per cent slump from their May 2007 peak.

Adrian Lowcock, senior investment adviser at Bestinvest, said: "In July we turned positive on commercial property, as listed property funds had already rebounded on the belief the worst was behind us."

Rebecca O'Keeffe, head of investment at fund supermarket Interactive Investor, commented: "The market volatility that was experienced throughout 2008 waned over the second half of 2009 and a good stable market performance has allowed investors to get back into a market that had previously been a paradise for traders."